Tax evasion crackdown 'threatens early intervention'
Neil Puffett
Wednesday, April 11, 2012
Attempts to fund early intervention work through social finance would be compromised by a government bid to crack down on tax evasion through charitable donations, it has been claimed.
Chancellor George Osborne is planning to limit tax breaks for donations to good causes.
But Graham Allen MP, who led a review on early intervention for the government, has hit out at the idea, suggesting such a move would be “a body blow” to efforts to create an Early Intervention Foundation.
He said the success of a planned Early Intervention Foundation will depend on bringing non-government funding to bear and developing the social finance market, something Osborne’s plans could hamper.
“Philanthropy is often the blue touch paper that ignites wider interest from non-governmental funders,” Allen said.
“For the Treasury to make it harder for philanthropy to play that role would fly in the face of what many other parts of government are trying to build within the economy.
“It will certainly make it unnecessarily harder for early intervention to thrive and to help develop a mature social finance market.
“Additionally it will be a body blow to efforts to create an endowment to sustain an Early Intervention Foundation.
“I would strongly support the Chancellor were he to have the courage and common sense to have another look at this complex issue and avoid the unintended consequence of reducing innovation and development of social investment in early intervention.”
The government plans have already come in for criticism from the Charities Aid Foundation amid concerns they could lead to a drop in donation income.
John Low, chief executive of the foundation, said it is wrong to equate tax relief on major donations to charity with tax avoidance.
“Philanthropists who make large donations give away far, far more than they could ever claim in tax relief.
“That money goes to fund projects for the public good, such as medical research and help for the most vulnerable in society.
Low said imposing a blanket cap on tax relief will “cost charities millions of pounds” by making it more difficult for philanthropists to make major donations.